Recession/Transcript
Transcript Text reads: The Mysteries of Life with Tim and Moby Tim and Moby are first in line waiting for a store to open its doors for a big sale. A TV camera films Tim while a reporter interviews him. TIM: Well, no. I don't believe camping out for twenty-four hours to buy the latest hover-scooter is outrageous. And with the economy how it is, I just want to do my part as a consumer. MOBY: Beep. TIM: Who are you calling camera hog? Moby is holding a letter. Tim reads from the typed letter. TIM: Dear Tim and Moby, what exactly is a recession? Is that what people mean by a "bad economy?" Thanks, Henry. Hi, Henry. A country's economy is the sum total of all the buying and selling that goes on there. So it's driven by the individual decisions of millions of people. A U.S. map shows figures in every state connected with dotted lines. TIM: Each of us participates in the economy as a consumer: we buy goods and services. Anytime you pay for food, a haircut, clothes, movie tickets, whatever, you're a consumer. The image of a woman replaces a figure on the map to represent an actual consumer. Symbols for the goods and services Tim describes appear as well as dollar signs. Arrows connect the consumer’s money to the goods and services she pays for. TIM: And since most of us work, we're also producers. We make food, design clothes, give haircuts, and sell movie tickets. Images of actual people replace the figures providing the services Tim describes. MOBY: Beep. TIM: That's right: my paper route makes me a producer, too. You can see that the economy is kind of like an ecosystem. Everyone plays a small part, and depends on everyone else. Side by side images show the figures connected on the U.S. map and a food chain ecosystem connecting ocean creatures. TIM: Now, say someone loses her job. She'll probably spend less money until she finds work again. She might get fewer haircuts, or not go to the movies for a while. The image of people who are connected as consumers and producers is shown. The lines connecting the consumer to the barber providing haircuts and the woman selling movie tickets disappear. MOBY: Beep. TIM: Right, those places have plenty of other customers. But imagine a lot of people lose their jobs. Now they're all spending less, and businesses really begin to feel it. The image of connected figures is shown. As people lose their jobs, their figures turn from blue to red and their connections to others disappear. TIM: Some companies might need to close for good. An animation shows a company with a "Closed" sign and a locked fence in front of it. TIM: Others will try to save money by laying off, or firing, workers. An image shows a line of laid-off workers. TIM: Now even more people are unemployed, spending less, and spreading the pain like a sickness. If it spreads far enough, and lasts long enough, we call it a recession. MOBY: Beep? TIM: For the average person, recessions can be incredibly stressful. Laid-off workers may have to borrow money or dip into savings, just to pay for basic stuff. If they don't have any savings, they can face some tough choices. An image shows a person holding a Late Rent Notice in front of an almost empty open refrigerator. TIM: No one wants to be in that position, so people who are working spend less and save more. Unfortunately, that leads to– MOBY: Beep! Beep! Beep! TIM: You guessed it: more stress on businesses, and higher unemployment. If things get bad enough, we call it a depression. MOBY: Beep. TIM: The good news is, things always get better, because the economy never stays put. It goes through ups and downs. When consumers spend more, businesses step up production and hire workers to meet the demand. Moby is at a robot stand that sells ice-cold gasoline for one dollar per cup. Robots are lined up to purchase the gasoline. TIM:But the economy can't keep expanding forever. Eventually it'll contract. Moby is alone at the gasoline stand because there are no customers to buy the gasoline. TIM: That's a recession, and just like the expansion, it's temporary. Eventually, business picks up again. Moby gets one customer at the stand. MOBY: Beep. TIM: This pattern of expansion and contraction is known as the business cycle. MOBY: Beep? TIM: Sure, it'd be great if we could get rid of the contractions. But no two recessions are the same, and they each have complex causes. Some are triggered by financial shocks, like in 2007, when U.S. home prices collapsed. A chart shows home prices going up steadily from 1980 to 2005, then falling steeply from 2005 to 2010. TIM: That set off a chain reaction leading to the Great Recession, which lasted almost two years. An image shows a headline that reads, "Meltdown Monday" and states that world stock markets plunged and U.S. banking giants collapsed. Underneath, a row of houses are shown with "For Sale" signs in front of them. MOBY: Beep? TIM: Well, the economy is too big and too complex for the government to just step in and fix everything. But it can influence people's behavior. First, to help prevent recessions, there's unemployment insurance. An image shows Uncle Sam giving money to an unemployed woman. TIM: These weekly checks from the government give laid-off workers a temporary source of income. During recessions, the government will often lower taxes, so people can keep more of their own money. It can also create jobs by funding construction projects and stuff like that. And it always lowers interest rates, making it easier to borrow money from banks. All these measures are designed to stimulate spending. Animations illustrate the government recession-easing measures that Tim describes. MOBY: Beep? TIM: Right, then businesses can increase production and start creating jobs again. The store that Tim and Moby are waiting in front of finally opens its doors. TIM: And that is why it is so important that I buy a hover-scooter today. For the economy! Tim and the line of shoppers behind him march into the store. Category:BrainPOP Transcripts